Blackstone Inc.’s stock rose Tuesday after the company was included as a component of the S&P 500 index some 16 years after the private-equity firm went public.
Blackstone’s stock
BX,
advanced 3.8% as a spokesperson for the company said its inclusion in the S&P 500 marks “another important milestone” for the private-equity firm, after it surpassed $1 trillion in assets under management in July.
“We are gratified to be joining the S&P 500 and pleased that this will make our stock even easier for shareholders to access,” the spokesperson said in an email to MarketWatch.
If it gains 3.7% or more in the current trading session, Blackstone’s stock would close at its highest level since Nov. 11, when it ended the day’s trading at $108.77 a share, according to Dow Jones Market Data. The stock is also on pace for its largest percentage increase since its 4.6% rise on July 13.
S&P on Friday named Blackstone and AirBNB
ABNB,
as components of the S&P 500.
Wells Fargo analyst Finian P. O’Shea on Tuesday reiterated an overweight rating on Blackstone and said that with its move into the S&P 500 market, it was the first major alternative-investment manager, or alt, to be included in the index, but more may soon follow.
“In our view, based on market cap, KKR & Co.
KKR,
and Apollo Global Management
APO,
seem most likely for future alt additions to the S&P 500,” O’Shea said.
Apollo’s stock rose 2.6% on Tuesday, while KKR’s dipped about 0.1%
“Alts have impressive track records for high-growth fee-related earnings, powerful diversification (by asset class, risk-reward profile, vehicle, geography, and client type), and stock outperformance,” O’Shea said.
With Blackstone’s stock gaining ground, investors appeared to shrug off a downgrade of the stock to neutral from buy at JPMorgan. The stock has also faced headwinds from its Blackstone Real Estate Income Trust fund, which limited redemptions from clients this year amid jitters around slack demand for office space.
“We see Blackstone appropriately valued at its current $107/share,” said JPMorgan analyst Kenneth B. Worthington. “For the multiple to expand further, we’d want to see organic growth supported again by perpetual fund growth, which is currently weighed down by a depressed sentiment for real estate investing.”
Speculation about Blackstone joining the S&P 500 has been running high since April after the S&P Index Committee updated its rules to clarify that companies with Blackstone’s share-class structure were eligible for inclusion. Blackstone’s voting rights are concentrated in its preferred stock, not its common stock, which sets it apart from many other companies.
Based on its market capitalization alone, which is about $124 billion, Blackstone would qualify for the S&P 500, which has a minimum market-cap threshold of $14.5 billion.
Blackstone went public in 2007 and converted from a partnership structure to a more traditional corporate structure, or C-Corp, in 2019.
Also read: Blackstone wrote down its stake in this Chicago office building to $0. Now it’s talking with lenders on the debt coming due.
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